Are you Properly Declaring Imports in your Vat Returns?
July 05, 2019
ARE YOU PROPERLY DECLARING IMPORTS IN YOUR VAT RETURNS
KNOW THE VAT IMPLICATION IF AN AGENT IMPORTS GOODS ON YOUR BEHALF
The Federal Tax Authority (‘FTA’) has recently issued a public clarification on the importation of goods by registered person (agent) on behalf of another registered persons as there was no sufficient clarity on this matter in the VAT Law & Executive Regulations.
This clarification discusses the adjustments to be made in VAT return of the importing agent, owner of the goods and availability of Input Tax.
When a registered person (importing agent) imports goods on behalf of the owner of the goods, he provides his own TRN and pays VAT on import of such goods. This VAT Amount is automatically pre-populated in Box 6 of the VAT return of Importing Agent.
Importing Agent will not be in a position to recover the VAT paid on import as he is not the owner of goods so, adjustment of this VAT amount is required to enable the actual owner of goods to recover VAT paid on Import.
Hence the FTA has laid down 2 options as follows:
a. Both the Importing agent and Owner of the goods will have to make respective adjustments in Box 7 of VAT returns. Now, the owner of the goods will be able to recover the VAT paid in Box 10 of his VAT return.
Both parties need to agree in writing and maintain evidence of this arrangement along with customs documentation and other required records.
b. The importing agent may issue a statement to the owner which will be considered as a Tax invoice for the purpose of recovering input tax by the owner.
Are you importing goods into UAE and want to have more clarity on procedures and associated VAT implications, get in touch with our team today to find out all you need to know!
Last Updated: 5th July 2019 This article is contributed by: CA Shruti Kakaria – Tax Consultant